Sir Martin Sorrell's Group M estimates that TV and press advertising revenues will fall by more than £350m in the UK during 2012, despite any windfalls generated by Euro 2012 and the London Olympics.

However, the slump in print and broadcast will be more than offset by a boom in digital advertising, according to the media buying network.

Group M slashed its forecast for TV ad revenue growth this year from 3% to 0.1% – and says that national newspapers will suffer sharper than previously predicted falls in spending.

In December Group M forecast TV ad revenue to come in at £3.56bn, but it has now stripped more than £70m from that prediction.

The national newspaper ad market will bring in £81m less in ad revenue this year than in 2011, after more than doubling the estimated fall in revenue from 3% to 6.3%.

However, Group M's overall growth forecast for the UK ad market is up from 3% to 3.4% compared with its December report – from £12.7bn to £13.2bn – mainly thanks to a rise in digital spending.

Internet spending is expected to hit £5.35bn this year – an increase of more than £650m over what Group M reckons was spent in 2011 – with a forecast of a 14.2% increase in 2012.

Group M had predicted in December that internet ad spending would grow 9% this year, meaning that this week's upgrade equates to about £100m increase in predicted digital spending.

Adam Smith, a director at Group M, said the overall market was sluggish. "UK advertising investment remains at maintenance levels, lagging even nominal GDP growth."

He added that the Olympics have not necessarily boosted spending on commercials. "It has mattered more to sponsorship and public relations," he said.

Elsewhere, the UK's regional newspaper market will bear the brunt of the year-on-year fall, with Group M increasing its prediction of a 7.8% fall in December to an 11% drop, which equates to £136m less ad revenue than was taken in 2011.

Group M is forecasting that the regional newspaper market will take £1.09bn in ad revenue this year, the first time the once all-powerful sector will bring in less than the national newspaper market.

The consumer and business magazine market has also taken a major hit, with Group M expecting £74m less in advertising to flow into the sector this year compared with 2011, at £836m.

Group M has downgraded consumer titles from a 3% to an 8% fall, and the business-to-business sector from an 8% to a 10% decline.

On the positive side, Group M predicted upgrades for the outdoor advertising sector, which is expected to be the biggest winner from brands attempting to cash in on the Olympics, with growth forecasts rising from 4.1% to 6%. Radio will also do slightly better than forecast in December, up from 4.7% growth to 5%.

Group M's Smith added that the UK growth level was "robust" compared with levels expected in other European markets this year. "Germany and France are barely positive in 2012 while Italy and Spain are expected to contract by about 8%," he said.

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